Edited version of private advice

Authorisation Number: 1052216333769

Date of advice: 5 January 2024

Ruling

Subject: CGT deceased estate 2-year discretion

Question

Can you disregard any capital gain or loss made upon the transfer of the 50% ownership interest in the property acquired by the deceased after September 20, 1985, under section 118-195 of the ITAA 1997?

Answer

Yes. Having considered your circumstances and the relevant factors the Commissioner will allow an extension of time. Further information about the Commissioner's discretion can be found by searching ato.gov.au for 'QC 66057'.

This ruling applies for the following period:

Period 30 June XXXX

The scheme commenced on:

XX July XXXX

Relevant facts and circumstances

The Property was situated on less than two hectares of land.

The Property was purchased Pre-CGT.

The Deceased and his wife acquired the Property as joint tenants on XX X XXXX.

The Deceased passed away on XX X XXXX.

The Property was the main residence of the Deceased just before they passed away and was not used to produce assessable income at that time.

One of the Deceased's children beneficiary C has always lived at the Property.

After the Deceased passed away beneficiary C suffered health issues and had to seek help over a 12-month period.

A signed Will appointed the deceased's three children as Executors and Trustees of the estate and beneficiaries of the estate.

There was also a signed hand written Will.

The draft Will was not signed and had spelling mistakes and needed to be amended.

The deceased passed before signing the new Will.

Covid lock down for 11days.

Covid lock down for 77 days.

ZZ Real Estate were organised to perform a property appraisal.

Lawyers A were appointed.

It needed to be confirmed with a barrister if you were able to proceed to probate with the signed hand written Will without making an application to the Supreme Court.

Lawyers A advised receipt of advice from the barrister.

Payment was made to have the memorandum of advice drawn up by the barrister.

Five months later you were contacted by a new solicitor of Lawyers A who had taken over the probate application.

The new solicitor engaged a new barrister to prepare the memorandum of advice.

The new solicitor of Lawyers A called to discuss the memorandum of advice and advised you would not be able to use the signed hand written Will to proceed to probate.

An appointment with solicitors B was arranged.

Solicitors B recommended to contact beneficiary B who had disappeared since XX X XXXX.

Beneficiary B had made certain lifestyle choices which made it difficult to contact them.

The three executors had a meeting to discuss the Will.

Beneficiary B was given copies of the three Wills to review.

Beneficiary B was seeking their own advice about contesting the Will.

Beneficiary B responded they was prepared to engage in settling the estate.

Beneficiary B agreed to meet with the solicitors to discuss the Deed of Family Arrangement.

All parties agreed to the terms of the Deed of Family Arrangement and solicitors B was instructed to draft the document.

The Deed of Family Arrangement was signed and witnessed by all three beneficiaries.

Arrangements were made to acquire the signed Will from lawyers A.

Lawyers A informed the signature of all three executors was required for the Will to be released.

Lawyers A released the signed Will.

The Probate advertisement was posted.

The signed Deed of Family Arrangement was delivered to solicitors B.

Probate was granted.

Lawyers A were contacted regarding picking up the title to the Property.

The Property title was acquired from lawyers A.

The certified copies of probate and the Will were picked up from solicitors B.

The documents needed to be correctly certified.

The probate documents were sent to the conveyancer to transfer the Property title to the estate.

C Partners were contacted, and the probate documents were submitted.

C Partners were contacted for advice on CGT extension.

Valuers were contacted about a certified valuation of the Property.

Transfer documents to transfer Property to the estate were received.

Signed documents were delivered to the Conveyancer.

The Property title was posted to the Conveyancer.

The draft addendum to Family Arrangement Deed was received from the solicitor.

The draft addendum of Family Arrangement Deed was sent to the Conveyancer for review.

The addendum was made as the intentions for beneficiary C to purchase remaining two thirds of the Property from beneficiary A and beneficiary B hadn't adequately been worded in the original Deed of Family Arrangement.

The Property transfer application documents were provided by the conveyancer.

The valuation of the Property was provided to the conveyancer as evidence for Land Titles.

All signed documents were delivered to the conveyancer.

An inventory of assets and liabilities was provided to the conveyancer at Land Titles request.

The title of the Property was transferred into the name of beneficiary C.

Relevant legislative provisions

Income Tax Assessment Act 1977 subsection 118-195